Income Tax FY 2025–26 · Budget 2024 Updated
Old RegimeVSNew Regime
Enter your salary and deductions - get an instant verdict on which regime saves you more tax in FY 2025–26
Step 1 - Enter your annual income
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₹3L₹1Cr
Step 2 - Your deductions (old regime only)
These don't apply in the new regime. Leave at 0 if unsure.
EPF, PPF, ELSS, LIC, home loan principal — max ₹1.5L
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Self & family premium — max ₹25K (₹50K for senior citizen)
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Annual HRA exempt amount (if you live in rented house)
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Annual interest paid on home loan — max ₹2L
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Additional NPS contribution over 80C — max ₹50K
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Total deductions
₹2.25 L
incl. ₹50K standard deduction
🟢
New regime saves you ₹40,300 in tax
With your income and deductions, the new regime charges ₹71,500 vs the old regime's ₹1,11,800. Switch to new regime.
Choose new regime+₹3,358/month in-hand
Detailed tax breakdown
New Regime
Std. deduction ₹75,000
Gross income₹12.00 L
Standard deduction− ₹75,000
Taxable income₹11.25 L
Tax (before cess)₹68,750
Health & edu cess₹2,750
Total tax payable
₹71,500
Effective rate: 6.0%
Monthly in-hand: ₹94,042
VS
Old Regime
Std. deduction ₹50,000 + your deductions
Gross income₹12.00 L
Total deductions− ₹2.25 L
Taxable income₹9.75 L
Tax (before cess)₹1,07,500
Health & edu cess₹4,300
Total tax payable
₹1.12 L
Effective rate: 9.3%
Monthly in-hand: ₹90,683
New regime saves ₹40,300/year(₹3,358/month more in-hand)
Tax liability across income levels - at maximum deductions
Old regime assumes: ₹1.5L (80C) + ₹25K (80D) + ₹50K (NPS) + ₹50K std. deduction
| Annual income | New regime tax | Old regime tax | Difference | Better regime |
|---|---|---|---|---|
| ₹5.00 L | ₹0 | ₹0 | Equal | Either |
| ₹7.00 L | ₹0 | ₹0 | Equal | Either |
| ₹8.00 L | ₹23,400 | ₹18,200 | Old saves ₹5,200 | Old regime |
| ₹10.00 L | ₹44,200 | ₹59,800 | New saves ₹15,600 | New regime |
| ₹12.00 L | ₹71,500 | ₹1,01,400 | New saves ₹29,900 | New regime |
| ₹15.00 L | ₹1,30,000 | ₹1,87,200 | New saves ₹57,200 | New regime |
| ₹17.00 L | ₹1,84,600 | ₹2,49,600 | New saves ₹65,000 | New regime |
| ₹20.00 L | ₹2,78,200 | ₹3,43,200 | New saves ₹65,000 | New regime |
| ₹30.00 L | ₹5,90,200 | ₹6,55,200 | New saves ₹65,000 | New regime |
| ₹50.00 L | ₹12,14,200 | ₹12,79,200 | New saves ₹65,000 | New regime |
*Assumes maximum deductions: ₹1.5L (80C) + ₹25K (80D) + ₹50K (NPS) + standard deduction. Use the calculator above for your exact numbers.
Your total deductions (old regime)
Std. deduction₹50,000
80C₹1,50,000
80D₹25,000
HRA₹0
24(b) interest₹0
NPS 80CCD(1B)₹0
Total₹2.25 L
New regime slabs - FY 2025–26
| Income slab | Tax rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Rebate u/s 87A: Zero tax for income up to ₹7L (after standard deduction). Std. deduction: ₹75,000.
Old regime slabs - FY 2025–26
| Income slab | Tax rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Rebate u/s 87A: Max ₹12,500 rebate for income up to ₹5L. Std. deduction: ₹50,000. Allows 80C, 80D, HRA, 24(b), NPS deductions.
✓ New regime is better when...
Annual income is below ₹7 lakh (zero tax due to rebate)
You have few deductions — no home loan, no HRA, minimal 80C
Only EPF contribution in 80C (mandatory, not voluntary)
You're a freelancer, consultant, or business owner
You prefer simplicity over tax planning
You live in company accommodation (no HRA benefit)
You're in the ₹7–10L income range (lower slab rates help)
✓ Old regime is better when...
You have a home loan with ₹1.5L+ annual interest
You live in a rented house and claim large HRA exemption
You maximise Section 80C (₹1.5L) — ELSS, PPF, LIC
You have health insurance and claim 80D (₹25K+)
You contribute to NPS and claim extra ₹50K under 80CCD(1B)
Total deductions exceed approximately ₹3.75 lakh
You're in the ₹15L+ income slab with maximum deductions
Old vs New Tax Regime - Complete Guide for FY 2025–26
From FY 2020–21, India has two parallel income tax regimes - the old regime (higher rates, more deductions) and the new regime (lower rates, no deductions). Every salaried individual must choose one at the start of each financial year.
Budget 2024 made two significant changes to the new regime: the standard deduction was raised from ₹50,000 to ₹75,000, and the rebate limit under Section 87A was increased - making the new regime more attractive for most middle-income taxpayers. But for high-income earners with large deductions, the old regime still wins.
All deductions available in the old regime
| Section | What it covers | Maximum deduction |
|---|---|---|
| Std. deduction | Available to all salaried employees | ₹50,000 |
| Section 80C | EPF, PPF, ELSS, NSC, LIC, home loan principal, tuition | ₹1,50,000 |
| Section 80D | Health insurance premium (self, family) | ₹25,000 (₹50K senior) |
| HRA exemption | House rent allowance for employees in rented homes | Based on formula |
| Section 24(b) | Home loan interest on self-occupied property | ₹2,00,000 |
| 80CCD(1B) | Additional NPS contribution beyond 80C | ₹50,000 |
| Section 80G | Donations to approved charities | 50%–100% of donation |
| 80E | Interest on education loan (8 years) | Full interest amount |
| 80EEA | Additional home loan interest for first-time buyers | ₹1,50,000 |
| LTA | Leave Travel Allowance for domestic travel | Actual expenses (2 trips/4 yrs) |
The tipping point
The old regime wins if your total eligible deductions exceed approximately ₹3.75 lakh. This number shifts slightly with income — use the calculator above with your actual deductions for a precise answer. Most people who maximise 80C + 80D + NPS alone cross ₹2.25L in deductions, and those with a home loan or HRA often exceed ₹4–5L total.
What changed in Budget 2024 for the new regime
📊
Standard deduction raised
Increased from ₹50,000 to ₹75,000. This alone reduces taxable income by an extra ₹25,000 - saving ₹2,600–₹7,500 in tax depending on your slab.
🎯
Employer NPS deduction
The employer's NPS contribution deduction limit was raised from 10% to 14% of basic salary - making NPS more attractive even in the new regime.
💼
New regime is now default
If you don't inform your employer of your choice, the new regime is applied for TDS. You can still switch when filing your return.
Calculate your income tax next
See your full tax calculation with TDS, refund and advance tax schedule
Frequently asked questions
Can I switch between old and new regime every year?▼
Salaried employees can switch between the old and new regime every financial year. Business owners and self-employed individuals can switch from new to old regime only once, and once they switch back to old, they cannot return to new. For salaried employees: inform your employer at the start of the year for TDS purposes. You can always make the final choice when filing your ITR — if you switch at ITR stage, excess TDS deducted by your employer will be refunded.
What happens if I don't choose a regime?▼
From FY 2023–24, the new tax regime is the default. If you don't inform your employer of your choice, they will deduct TDS under the new regime. You can still choose the old regime when filing your return — any excess tax deducted will come back as a refund. This means not making a choice effectively makes you a new regime taxpayer for the year unless corrected at ITR filing.
Is the new regime always better for income below ₹7 lakh?▼
Yes, for income up to ₹7,75,000 (after the ₹75,000 standard deduction, taxable income is ₹7,00,000 or less), the new regime results in zero tax due to the Section 87A rebate. This makes the new regime unambiguously better for this income range regardless of deductions — because the old regime would also result in zero tax after rebate for income up to ₹5L, but for ₹5–7.75L, only the new regime delivers zero tax.
Does 80C investment still make sense under the new regime?▼
From a tax perspective, 80C investments like PPF, ELSS, and EPF provide no tax benefit under the new regime. However, they're still excellent investments for their own merits — PPF offers tax-free guaranteed returns, ELSS gives equity market exposure, and EPF builds a retirement corpus. You should invest in these based on your financial goals, not just for the tax deduction. If you choose the new regime purely for tax savings, you don't need to invest ₹1.5L in 80C instruments — but you might still want to for other reasons.
How is HRA exemption calculated for the old regime?▼
HRA exemption is the minimum of three amounts: (1) Actual HRA received from employer, (2) Actual rent paid minus 10% of basic salary, and (3) 50% of basic salary for metro cities (Mumbai, Delhi, Kolkata, Chennai) or 40% for non-metro cities. Calculate all three and take the smallest — that's your exempt HRA. The remaining HRA (if any) is taxable. This calculation is why high-salary employees in expensive rental cities benefit significantly from the old regime.
What deductions are still allowed in the new regime?▼
The new regime allows very few deductions: Standard deduction of ₹75,000 (for salaried employees and pensioners), employer's NPS contribution under Section 80CCD(2) — up to 14% of basic salary, deduction for disability under Section 80U, deduction for dependent with disability under Section 80DD, and a few other specific deductions. Notably, there's no 80C, no 80D, no HRA exemption, and no home loan interest deduction in the new regime.
I have both salary and business income — which regime applies?▼
If you have business income (even freelancing or consulting income), the regime rules change significantly. Once you opt for the old tax regime, you can switch to the new regime only once in a lifetime. Once you switch from old to new, you cannot go back. This restriction doesn't apply to pure salaried employees. If you're in this situation, carefully evaluate which regime suits your long-term financial situation before making a choice — ideally with a chartered accountant.